Maldives scraps GMR project, India calls it a 'very negative' signal

Close on the heels of Maldives president Mohammed Waheed terming GMR's airport project, near capital Male, a "bad contract", the country's cabinet today went a step ahead to terminate the contract.

NDTV | Last Updated: November 28, 2012 00:21 (IST)

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New Delhi:

Close on the heels of Maldives president Mohammed Waheed terming GMR's airport project near Male a "bad contract", the country's cabinet today went a step ahead and terminated the contract.

The main opposition to the contract came from the ruling government's current coalition partner - Jamhoorie Party - headed by Gasim Ibrahim, who had lost the bid to develop the airport to GMR.

The Indian government, reacting to the development, said the decision to terminate the contract without due consultations sends a 'very negative' signal to foreign investors, even as it asked Maldives to ensure protection of India's interests and security of its nationals in the island nation. (Read about the government's response)

Announcing the cancellation of the agreement, Attorney General Aishath Azima Shakoor said the decision was taken "with the necessary legal expertise and the decision has been conveyed to Maldives Airports Company Limited (MACL)".

GMR had won the $500 million airport contract during the government of Waheed's predecessor Mohamed Nasheed, and the project ran into rough weather soon after the regime change in the country earlier this year.

The airport contract was awarded to GMR through a 10-month long global competitive bidding process by the then Maldivian government headed by Nasheed.

An opposition party also took to court the issue of $25 Airport Development Charge (ADC) to be charged from outgoing passengers by GMR, as stipulated in the concession agreement. The new government stepped up nationalisation rhetoric after assuming power, and asked GMR to temporarily halt the development of a new terminal at Ibrahim Nasir International Airport (INIA).

The airport agreement was the largest single investment in the history of Maldives.